There are over 2.5 million small businesses in Florida. Business owners are constantly looking for ways to stay ahead of their finances.
Yet annual taxes always seem to derail those money-saving hopes. But what if we told you there were ways that you can plan your tax strategy to help you save more?
That’s what we’re here to discuss today. Read on to learn about tax planning strategies for small businesses in Sarasota FL.
Change Business Structure
One of the biggest burdens as a small business owner is that you don’t have an employer paying part of your taxes. You shoulder all of your Social Security and Medicare bills.
The type of business structure you choose, however, can alleviate some of those costs. Being classified as a Limited Liability Company (LLC) can take away the employer-half of those taxes.
While you still pay taxes as an LLC, it reduces the cost by a good amount. While switching to an LLC is a big move, it can greatly reduce tax responsibilities.
Being a small business owner means you don’t get a 401(k) match from an employer. That doesn’t mean you can’t receive any retirement plans, however.
A one-participant 401(k) plan lets you pocket up to $57,000 in contributions for retirement. You can leverage things like a Simplified Employee Pension Plan, an IRA or Roth IRA, and 403(b) plans.
Retirement plans are therefore an effective small business tax planning strategy for business owners in Sarasota FL.
Another highly effective tax planning strategy is to put money aside for healthcare needs. Saving money for any unexpected health emergency is crucial even if you’re healthy right now.
A Health Savings Account is valuable here if you have a high-deductible health plan. You can reduce taxes and other medical costs this way.
Your contributions are pre-tax and they can grow tax-free. Withdrawals for any medical expenses are also tax-free.
Claim Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal credit given to employers who hire workers from specific demographics. That is, hiring people like veterans, disabled workers, or other disenfranchised groups can get you a tax credit.
You can get a sizable portion of qualified wages paid to new hires this way. Not only do you help out workers who typically can’t find work, but you’ll also take advantage of a lucrative tax planning strategy.
Employ Family Members
Hiring family members can be highly beneficial for small business owners. The IRS lets you shelter income from taxes if you hire relatives or even children.
For example, if you hire one of your children you won’t have to pay Social Security or Medicare taxes. Things like the FUTA tax might also be waived if you hire your spouse.
You can also put aside retirement savings for these family members depending on their benefits from other jobs.
Leverage Tax Planning Strategies Today
Small business owners in Sarasota FL and elsewhere need as many strategies as they can get to lower their annual taxes. Use this guide to find the best tax planning strategies for your business today.
Looking for reliable tax and accounting services in the Sarasota area? Contact us today and we’ll get you started on the right solution!
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